The official, who asked not to be named, said trade and investment were hugely important to the relationship with Beijing, the EU being China's largest single market.
The source said Chinese officials had "mentioned again" the issue of a Free Trade Agreement during a visit to China last month by EU foreign affairs head Catherine Ashton.
The EU feels, however, that an investment accord was the most appropriate next step while an FTA would "not be excluded in the medium- to longer-term," the official said.
The official said the EU had also reassured Beijing that an FTA with Washington would benefit all sides, including China.
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The accord was "not aimed at closing the transatlantic relationship" but rather at opening it up, the official added.
Beijing has expressed concerns over what it sees as US efforts to contain its power in Asia and the Pacific, being especially critical of Washington's 'pivot' back to the region under President Barack Obama.